The world’s top body for the fight against money laundering on Friday said it has found a “high level of technical compliance” with global standards in Luxembourg. The Financial Action Task Force, or FATF still recommended that the Grand Duchy strengthens its measures in certain complex areas, in line with its risk profile as a regional and global financial centre.
“Luxembourg has a very good idea of what it needs to do,” said FATF president T. Raja Kumar in response to a question by Investment Officer during a press conference in Paris.
At this week’s plenary session the FATF, a global body established by the G7 countries under the wings of the Paris-based Organisation for Economic Development and Cooperation discussed a mutual evaluation of anti-money laundering efforts made in Luxembourg’s financial sector. The report, based on a FATF country visit last November, assessed the effectiveness of that country’s measures to combat money laundering.
This week’s three-day plenary meeting concluded that Luxembourg has reached a high level of technical compliance with the FATF’s requirements and found that “its AML/CFT regime is delivering good results“.
‘Good understanding’ of risks
“Luxembourg has achieved a good understanding of the money laundering and terrorist financing risks it faces, particularly important given its status as a regional and international financial centre,” the FATF communiqué said. “The country achieved robust domestic co-operation and coordination at both policy and operational levels, including in the use of financial intelligence and access to beneficial ownership information, and constructive cooperation with its international counterparts.”
Luxembourg’s finance and justice ministries were quick to respond with a statement, even though today is marked by the country’s national holiday. They both noted that the FATF evaluation report marks the penultimate step in the evaluation process of Luxembourg within the framework of the fourth round of mutual evaluations by FATF, and noted that the report can only be considered final once it has been reviewed by all FATF members during the coming weeks.
‘Certain areas’ in need of stronger focus
Luxembourg, FATF concluded at its Paris plenary meeting this week, needs to focus on strengthening its measures in certain areas, including improving the detection, investigation and prosecution of more complex money laundering cases, in line with the country’s risk profile.
“Luxembourg should also strengthen the risk-based supervision of its non-financial sector, further develop and disseminate its understanding of terrorist financing risks to both the public and private sectors and apply proportionate and dissuasive sanctions for noncompliance to its financial and non-financial sectors.”
The FATF will publish its mutual evaluation report for Luxembourg by September after the FATF’s quality and consistency review is completed.
A similar FATF evaluation report in 2010 found a number of weaknesses in Luxembourg’s approach to the combat against money laundering. Since then, Luxembourg’s, including its supervisor CSSF, banks and asset management and asset services companies, have significantly improved their approach to AML/CFT. After an action plan was implemented in Luxembourg, in 2014 FATF agreed that its measures were strong enough to remove it from the FATF grey list.
ATF this week also agreed that Russia remains suspended as a member of the task force. FATF made no changes to the countries blacklisted: North Korea, Iran and Myanmar.